GM to narrow its brands' lineup of vehicles

May 20, 2005|By Danny Hakim, the New York Times

DETROIT -- Facing its worst financial outlook in more than a decade, General Motors outlined a new product development and sales strategy Thursday, saying that from now on Chevrolet and Cadillac would be the company's only brands to offer a full lineup of vehicles.

That means GM's other six brands marketed in the United States will focus on a narrower selection of segments. GMC and Hummer will continue to sell trucks while Pontiac, Saab and Saturn will focus mostly on cars and smaller SUVs, with Buick offering some of both.

The new plan indicates that GM is trying to wean itself from what has been a highly criticized product development strategy, in which the company keeps costs down by developing the same basic vehicle for many of its brands.

It will also likely mean consolidation of the company's more than 7,000 dealers.

Under the plan, GM will avoid having to shut down another brand, as it did with Oldsmobile. There was concern among dealers that Buick and Pontiac were vulnerable.

Stephen Girsky, a Morgan Stanley analyst, called the new strategy a good idea.

"Instead of forcing yourself to provide a full line of product to all these brands, which is expensive and ends up producing mediocre stuff, you don't force each brand to be all things to all people," he said.